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Action Lab: Integrated Communications on Financial and ESG Performance in the Earnings Call

Author

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  • Setterberg, Hanna

    (Mistra Center for Sustainable Markets (Misum))

  • Sjöström, Emma

    (Mistra Center for Sustainable Markets (Misum))

Abstract

One of the most important forums for companies to disclose financial information to the market is the quarterly earnings call. Environmental, social and governance (ESG) issues are gaining increased traction among institutional investors but are yet to find a place in the earnings call. We launched the Action Lab project, which was a facilitated process of investor relations and sustainability functions working together to communicate ESG factors in the earnings call setting. Three publicly listed companies committed to work with us in the lead-up to the third quarter 2017 call, when they would include ESG dimensions in their presentations. Five major challenges emerged from our research. First, there is a chicken and egg situation in which companies do not convey ESG information because they think analysts are not interested, and analyst do not ask ESG-related questions because there is no ESG-related information for them to base questions on. Second, it is challenging to quantify ESG factors in ways that fit analysts’ models. Third, the earnings call is a highly ritualized event and there is a reluctance to change the format. Fourth, there is a fear on the company side that ESG issues might be perceived as greenwashing, especially in times of weaker financial performance. Finally, ESG perspectives are typically too long-term to fit the focus of a short-term earnings call, and might therefore be better suited to other forums.

Suggested Citation

  • Setterberg, Hanna & Sjöström, Emma, 2021. "Action Lab: Integrated Communications on Financial and ESG Performance in the Earnings Call," HOSS Working Paper Series 2021-1, Stockholm School of Economics, House of Sustainable Society (HOSS).
    • Handle: RePEc:hhs:hamisu:2021_001
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    References listed on IDEAS

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    1. Brown, Lawrence D. & Call, Andrew C. & Clement, Michael B. & Sharp, Nathan Y., 2019. "Managing the narrative: Investor relations officers and corporate disclosure✰," Journal of Accounting and Economics, Elsevier, vol. 67(1), pages 58-79.
    2. L'industria, 2021. "Call for paper," L'industria, Società editrice il Mulino, issue 3, pages 579-593.
    3. Call, Andrew C. & Sharp, Nathan Y. & Shohfi, Thomas D., 2021. "Which buy-side institutions participate in public earnings conference calls? Implications for capital markets and sell-side coverage," Journal of Corporate Finance, Elsevier, vol. 68(C).
    4. Cen, Ling & Chen, Jing & Dasgupta, Sudipto & Ragunathan, Vanitha, 2021. "Do Analysts and Their Employers Value Access to Management? Evidence from Earnings Conference Call Participation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 56(3), pages 745-787, May.
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    Cited by:

    1. Michał Dzieliński & Florian Eugster & Emma Sjöström & Alexander F. Wagner, 2022. "Climate Talk in Corporate Earnings Calls," Swiss Finance Institute Research Paper Series 22-14, Swiss Finance Institute.
    2. Jaemin Kim & Joy Jiang & Michael Greiner, 2025. "Executive Presentations and Environmental Action in Polluting Industries: Moderating Effects of Narrative and Numeric Concreteness on Aspirational Talk," Journal of Business Ethics, Springer, vol. 199(2), pages 255-283, June.

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    Keywords

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    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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